Reporting earlier this afternoon on the potential details of a House Republican plan to raise the debt ceiling, Luke Russert said something on MSNBC’s “Now with Alex Wagner” that was the rhetorical equivalent of a red flag. The deadline for default would be extended to Nov. 22 and it would strip Treasury Secretary Jack Lew of his ability to employ extraordinary measures to keep the federal government from bumping up against the debt ceiling. The Post and others have also reported this.
This makes no sense. Why on earth would the administration agree to a deal that would limit Lew’s ability to keep the economic ship of state afloat? Surely, this is yet another display of economic ignorance by Tea Party hardliners. But according to folks who know the ins and outs of the economy, stopping the use of extraordinary measures is a good thing.
“Actually, this might be a constructive development,” Steve Bell of the Bipartisan Policy Center told me. “No one will have to guess when the X-date is….Markets will have certainty. So, although it reduces flexibility, it also reduces uncertainty.”
Former Treasury official Mark Patterson, now a senior fellow at the Center for American Progress agreed. “The repeated debt ceiling dramas have caused Congress and the world to view the extraordinary measures as ordinary, and so their only purpose now is to add a finite amount of time on top of whatever the debt ceiling is that Congress sets,” he said via email. “[T]here is actually some benefit I think for the whole world to know that it is a fixed date set by Congress rather than a date Treasury sets based on estimates of cash flows. So I think it’s OK. Extraordinary measures don’t really do us any good anymore.”
Fine. That part of the Republican proposal is a blessing in disguise. But given Congress’s ability to blow deadline and allow the untenable to happen (read sequester), I’ll continue to fear for the full faith and credit of the United States.
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